Diverse Business

Last Updated by WikiWealth | Update This Page Flag this page Delete This Page

rating: 0+x

Diverse operations should shield a business during downturns in the economy. A stable business also allows the company to lower it's risk and increase it's value. Additionally, if one area suffers a downturn, other business can provide cash flow to reinvest in the depressed area before the next upturn in business. Diversification could bring benefits and stability to company especially in volatile markets.

A country works the same way. When a country's business is diverse, this shields them from risk. If one business fails, the other businesses can fill in the gaps until the industry recovers. If a country relied only on tourism, a change in that market could ruin many other businesses that relied on it. Unemployment would increase and other issues would harm the entire economy.

Specific Company Comments:
Google: Diversification outside of search technology is low. Google relies on one product for the majority of it's revenue and profits, which makes it difficult if that product fails or decreases.
C:Citi has many different ways to make money and many different sources of capital, such as bank deposits. … "Diverse Business" has a significant impact, so an analyst should put more weight into it. "Diverse Business" will have a long-term positive impact on the this entity, which adds to its value.